Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/210

 § 225.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. full power to manage the concerns of the company. 1 Thus, bank directors have authority to make discounts, and fix the discount rate. 2 And with directors rests the power to place unsubscribed stock. 3 Directors of a railroad company may competently contract to transport freight for a fixed term at a certain rate ; 4 and it has been held to be within the discre- tionary power of the boards of two connecting roads to make an agreement for the division of earnings proportioned to the distance that each corporation carries the passengers or freight for which the money is paid. 5 Again, in a case where the deed of settlement of a joint-stock bank gave its directors extensive powers to carry on the business of banking and to act in such manner as might appear to them best calculated to promote the interest of the bank, it was held that they had power to guar- anty the payment of interest on debentures of another com- pany issued for the purposes of its formation, when that was of importance to the bank. 6 Directors are the proper officers to institute legal proceedings on behalf of the corporation, and i4i*/ s t that end have unquestioned authority to employ counsel, 7 and compromise litigation. 8 § 225. To carry on the corporate business, directors have 2 1 Sims u. Street Railroad Co., 37 Ohio St. 556; see Dana v. Bank of United States, 5 W. & S. 223, 246; Bank of Kentucky v. Schuylkill Bank, 1 Pars. Sel. Cas. (Pa.) 236; Wright v. Oroville M'g Co., 40 Cal. 20; com- pare Beaty v. Knowler's Lessee, 4 Pet. 152; Bargate v. Shortridge, 5 H. L. Cas. 297. 2 Bank of United States v. Dunn, 6 Pet. 51 ; Bank Commissioners v. Bank of Buffalo, 6 Paige, 497. 3 Sims v. Street Railroad, 37 Ohio St. 556. 4 Railroad Co. v. Furnace Co., 37 Ohio St. 321. 5 Elkins v. Camden and Atlantic R. R. Co., 36 N. J. Eq. 241. 6 In re West of England Bank, Ex parte Booker, L. R. 14 Ch. D. 317. So, where a lease was made of its road 190 by one railroad corporation to an- other, which lease was executed by the share-holders and provided for a guaranty by the lessee corporation of a ten per cent, annual dividend on the stock of the lessor corporation, it was held that the respective boards of directors had power to modify the terms of the lease and reduce the amount guaranteed. People v. Met- ropolitan Ry. Co., 26 Hun, 82; Flagg v. Manhattan Ry. Co., 10 Fed. Rep # 413; S. C, 20 Blatchf. 142. (Quaere as to the propriety of these two de- cisions. ) See Sheffield Nickel Co. v. Unwin, 36 L. T. N. S. 246; S. C, L. R. 2 Q. B. Div. 214. 7 See Pollock v. Shultze, 1 Hun, 320. 8 Donohue v. Mariposa Land, etc., Co., 66 Cal. 317. See § 223, note.